M/S Sri Venkata Ramana Medical And General Stores vs. Employees State Insurance Corporation (Esi)
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The Petitioner, M/s Sri Venkata Ramana Medical and General Stores, filed a writ petition challenging the Employees State Insurance Corporation's (ESIC) decision to qualify the 2nd Respondent, M/s Vijaya Medical and General Stores, in a technical bid for empanelment as a local chemist for drug supply. The tender required a minimum average annual turnover of Rs. 200 lakhs for the bidder and Rs. 900 lakhs for the OEM for the last three years, along with a minimum of three years of experience. The Petitioner alleged that the 2nd Respondent initially failed to submit all required documents on time and was disqualified, but was later declared qualified by ESIC, leading to the Petitioner being placed as L1 and the 2nd Respondent as L3. The Petitioner contended that ESIC's action was illegal, arbitrary, and favored the 2nd Respondent, as documents were accepted after the bid closing date.
Held
The Court held that the action of ESIC in qualifying the 2nd Respondent after its initial disqualification was irrational, mala fide, and intended to favor the 2nd Respondent, thus opposing the rule of law. The Court noted that the tender conditions clearly stipulated that certain documents had to be submitted along with the tender, which was an essential condition that had to be strictly complied with. The 2nd Respondent had admittedly been disqualified on 01.12.2023, and accepting documents after the bid end date of 14.09.2023 was contrary to the tender notification. The Court found that ESIC had no power to condone such a lack of strict compliance, and any such condonation amounted to perversity. The Court also observed that an earlier submission by ESIC's counsel on 18.12.2023 stated that the 2nd Respondent had been disqualified and blacklisted, which was later contradicted by ESIC's counter affidavit. The Court allowed the writ petition, directing ESIC to disqualify the 2nd Respondent and reconsider the Petitioner's empanelment.
Key Issues
1. Whether the action of the first respondent (ESIC) in qualifying the second respondent (M/s Vijaya Medical and General Stores) in the technical bid, after initially disqualifying it, and subsequently opening its financial bid, was illegal, arbitrary, and without jurisdiction, thereby violating the principles of fairness and transparency in public procurement? 2. Whether the first respondent acted contrary to the tender conditions by accepting documents from the second respondent after the stipulated bid closing date, and whether such condonation of non-compliance is permissible? Petitioner's Arguments: The Petitioner argued that the 2nd Respondent was initially disqualified in the technical evaluation and that accepting documents after the bid end time of 14.09.2023 at 16:00 hours was impermissible. They contended that ESIC's decision to later qualify the 2nd Respondent amounted to favoritism and went beyond the scope of tender conditions. The Petitioner relied on the principle that a tender process can be interdicted in judicial review when it is unfair, arbitrary, or mala fide. They cited the Apex Court judgment in Jagdish Mandal vs. State of Orissa.
Sections Cited
Section 15, Section 151 CPC
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Cause title — parties, addresses and appearances
The Court made the following: ORDER
E7 3 THE HON'BLE MRS JUSTICE SUREPALLI NANDA W.P. No. 34L67 of 2023 ORDER: Heard Learned Counsel Mr. N. Sridhar Reddy appearing on behalf of the Petitioner, Mr. Muppu Ravinder Reddy appearing on behalf of 1't Respondent and Mrs. P. Vijayalakshmi on behalf of Respondent No.2. 2. The Petitioner approached the Court seeking prayer as under : "To issue Writ of Mandamus or any other appropriate writ/writs declaring the actions of 1st respondent in qualifying the 2"d respondent in technical bid and opening his financial, and also seeking to award the contract for empanelment of local chemist for purchase of drugs required by the ESIC Hospital and College for the patients, pursuant to Tender Document issued vide Tender Enquiry No.799-U 16/A/Local chemist/2023-24 dared 24.08.2023, Brd No.GEM/2023/8/3902528, dated 04.09.2023 has wholly illegal, arbitrary and without juri iction and consequentially directing the first respondent to disqualify the 2nd respondent and empanel the petitioner herein as their local chemist for the supply of drugs required by them Award costs." I I i I I I I I I t
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The case of the petitioner as per the averments made in the affidavit filed in support of the present writ petation is as follows : a) The Petitioner herein is a registered propriety Firm and conducts Wholesale and Retail business in supply of Medical, Surgical and Consumables, established in the year 2007 and has been doing business in the said field since then. The 1.t Respondent had called for bids for supply of non-anti cancer drugs, anti cancer drugs, Vaccines, Inj, Immunoglobulins Inj, Human Albumin and for local chemist empanelment vide Proceedings No. Tender Enquiry No. 7gg_U_16/A/Locat Chemist/2023-24, dated 24.08.2023. As per the tender conditions the bid has to be filed Online in the Government e_ Market place (GEM portal) Bid No.GEM/2023 /B/3}O2S2B, dated 04.09.2023 according to which the last date for fiting of the Bid was 14.09.2023 at 16.00 hours. The date of opening of the Bid was also 14.09.2023 at 16.30 hours. In so far as the prerequisite criteria is concerned as per the Bid document, the minimum average annual turnover of the bidder for the last 3 (three) years shall be Rs.200 lakhs and the Originat i 1
5 , Equipment Manufacturer (OEM) average annual turnover for the last 3 years shall be Rs.g00 lakhs and the bidder shall have minimum experience of 3 years. The petitioner and the 2nd Respondent participated in the said tender notification. The details of the Technical Evaluation undertaken by the 1st Respondent declared the petitioner as eualiFied and 2nd Respondent as disqualified. Later on, the 2nd respondent was made qualified in the technical bid and was placed as L3. It is the specific case of the petitioner that the 2nd Respondent had not submitted all the documents in time and was disqualified in the technical evaluation and had submitted the documents at a later stage which were considered by the 1.t Respondent and the petitioner was later declared as successful bidder considering the documents submitted by the 2nd Respondent at a later da te. b) Thereafter, as per the GEM web portal the petitioner was placed as L1 and the 2nd respondent as L3. Thus, the petitioner has approached the first respondent to invite the petitioner for entering into the agreement as per the tender result. However, the 2nd respondent was invited to sign the contract. Hence, the process of entering into contract with 6 the 2nd respondent, who has been qualified in the technical bid as L3, by the 1st respondent is wholly illegal. Thus, aggrieved by action of the I't respondent, the present writ petition is filed.
The learned Counsel appearing on behalf of the Petationer mainly puts forth the following submissions : a) On 18-12-2023 when the present writ petition came up for admission the Learned Counsel appearing on behatf of the l't Respondent on instructions from 1't Respondent has specifically informed the Court that the 2nd Respondent has been disqualified in the subject tender and also black listed. The said statement is in fact part of the docket order dated L8.L2.2O22 in the present W.P.No.34167 ot 2023. b) The 2nd Respondent having been declared disqualified cannot be entrusted with work and the 1't Respondent cannot proceed and enter into an agreement with the 2nd Respondent. c) The 2nd Respondent having been disqualified in the technical evaluation cannot be Iater declared as / qualified and the same amounts to favouritism of the 1't Respondent in favour of the 2nd Respondent. d) The 1"t Respondent has gone beyond the scope of the tender conditions. e) The 1"t Respondent ought not have considered the documents submitted by the 2nd Respondent at a later date. f) The actaon of the 1"t Respondent in declaring the 2nd Respondent as qualified at the later date having declared the 2nd Respondent disqualified on O1.12.2023 and having declared the Petitioner and another tenderer by name M/s. Sai Pharmacy as qualified. g) On 16.12.2O23 a communication is received by the Petitioner declaring the 2nd Respondent as qualified in the technicat bid and the 1't Respondent thus failed to act in a fair and transparent manner since admittedly the zn't Respondent had been disqualified on OL.t2.2O23 and as per tender notification no person can be permitted to file any documents after the bid
8 end time i.e., 14.O9.2023 at 16.O0 hours since the said date is the last date for the filing of bid. h) The Learned Counsel appearing on behalf of the Petitioner in support of the said submissions ptaced reliance in order dated 12.12.2023 passed by the High Court of Calcutta in Saheli Nandi vs. Union of India & 5) Counter affidavit has been filed by the 1"t Respondent and the relevant para 5, clause (b) and (c) of the said counter affidavit as extracted hereunder :
"
I submit that the petitioner had suppressed the material facts and had misconstrued the tender procedure and filed the above writ petition. The respondent herein would submit the Facts and the circumstances which are been suppressed by the petitioner hereu nde r. (b)That the petitioner herein, respondent No.2 herein and Sai Pharma had submitted its bids through the GeM Portal. Upon such submission the respondent No.1 Medical Hospitat had technically evaluated the said bids,
9 i I I III I II in such bids the respondent No.2 has submitted documents mentioned in the tender notification such as office allotment orders, the time of evaluation of technical bid. The respondent No.1 Medical Hospital asked office order along with the indent orders regarding supply of medicine. The respondent No.2 has submitted the same hence, declared as a successful bidder. It is needless to add that the re olldent o.2 was dis ualified in the tec nl but not blacklisted in the bid. (c) That the respondent No.1 is the statutory authority had followed due procedure in inviting the tenders for the Local Chemist for purchase of drugs. Further the e nd nt No.1 ha ev ua d terms and conditions of the tender notification, and the resoondent No.2 stood as the successfu! bidder bv quotinq the hiqhest discounts in the D ruos. 6) Counter affidavit has been filed bv the znd Respondent and the relevant paras 3 and 7 read as under:
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At the outset. the present writ petition filed by the Petitioner herein is not maintainable, neither under law nor on the facts of the case. That this Respondent had also partrcipated in the tender Date 04.09.2023 vide Bid No. GEM/2023/B/3902528 and had submitted all the 10 necessary documents during the bid. That the Re ondent No.1 durinq the technical eva luatio n had disoualifi d the 2td Resoondent for non- massi s as ers while grvrng an opportunity of 48 hours for giving the clarifications and to submit the necessary documents. That this Respondent uoon noticinq the said obiection had found that the Resoondent No.1 had disqualified it, for which this Respondent had clarified the said objection while submitting the necessary previous purchase orders. The Respondent No.1 upon considering the said clarification and purchase orders had qualified this Respondent for the Financial Bid. Thus this Res ndent st ds ucce futbadd as L-3 inth e r said tender. In fact, the GEM portal clearly mentioned that after the technical evaluation, the disqualified bids were uploaded in the tender portal and given an opportunity to give their representations within 4Bl24 hours to buyers decision of normal or shorter bids if they feel that their tender were wrongly disqualified in the representation/challenge, rejection, option obligation. challenge rejection option in the participated, bid list page. Hence, there is no arbitrariness in granting the tender in favour of this Respondent. Hence, Writ Petition is liable to be dismissed on this ground atone.
In reply to para 6 of the affidavit annexed to the writ petition, the petitioner admitted that after the technical evaluation the qualified and disqualified bidders were 11 uploaded in the Tender Portal and given an opportunity to give their representations (within 48l24hrs of buyers decision for normal/shorter bids) if they Feel that their tenders were wrongly disqualified in the (representation/challenge Rejection option available on the participated bid list page. In view of the said tender GeM portal this respondent had submitted all required documents along with the representation within time specified. Hence, there is nothing arbitrary or illegal. 7) Para 4 of th Reolv Affidavit filed bv the Petitioner reads as under:
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I submit that a person who is declared as disqualrfied in the technical evaluation cannot be qualified thereafter by considering the documents which were su bm itted at a later date. It may be true that the 2nd Respondent has participated and was successful in many tenders which are stated in the Counter Affidavit but that itself does not qive them anv coDe or cha nce submit the do uments at a later date in the oresent case, more so afte eclarino as r ls ua lifi h techni ti n. Iti further sub itted that it is also false to state that n the financi, hi.l the 2nd Raeat.lnr{afi+ was t h lowest h dd r. It rs submitted that a mttted v the 2nd Resoondent was ol ced as L-3 which shows that thev lowest. have bad thehiohest amoun andnot the 12 DI USSION AND CONCLUSION :
A bare perusat of the material document i.e. Annexure-V pertaining to Tender Terms and Conditions filed by the Petitioner in support of the present writ petition and in particular Clause 15 reads as under: Clause 15 DO UMEN REOUI RED The Contractor ( al Ch mist) will have to bmi hef owtn docum nts n hth Tender : i) Valid drug license for retail chemists as per Drugs and Cosmetics Act. ii) No conviction Certificate from State Drug Controller that there is no case pending under the drugs and cosmetics Act and Rules there under as well as under Drug Price Control Order against the firm during the Iast 5 year. No conviction Certificate should be of the recent calendar year. iii) Valid Trade License. iv) GST registration certiFicate. v) Mandate Form for e-payment purposes. vi) Audited Annual Turnover of Rs.2 crores or more duly certified by Chartered Accountant along with profit and loss account and income & expenditure statement of the firm for the last three years.
The bid details read as under : Bid nd Date IT ime - 14.O9.2O23 - 16.0o.oo Bid oDenino Date / Time - L4.O9 .2023 - 16. o.oo
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The Apex Court in the judgment reported in (t979) 3 SCC 489 in Ramana Dayaram Shetty vs. International Airport Authority of India clearty observed that the words used in the tender document cannot be ignored or treated as redundant or superfluous - they must be given their necessary 14 SCC 517 it is observed as under : "Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial I I
74 review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commerciat transaction. Evalutating tenders and awarding contracts are essentially commerciat functions. Principles of equity and natural justice stay at a distance. If the decision is retating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judiciat review, interfere even if a procedurat aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicia! review wilt not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessfut tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedura! viotation or some prejudice to self, and persuade coutts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hotd up public works for years, or delay relief and succour to thousand and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power
15 of judicial review, should pose to itself the following questions; (i) Whether the orocess adopted or decision b the authori rsm tended t fav I m n OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say : "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached "; ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distributaon of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.'"
A bare oerusal of the relevan DOr lo t t of the Aoex Court iudoement extracted above, clearlv indicates that I i a tender Dro ess can be interdicted in iudicial review rrrhan the rocess ad ai irtarl or ecrs on mad d a hw tha Authoritv is mala fide or intended to favour someone. This Court o ines that the Dresent case falls under Itr Clause (i) of the ADex ourt iudoement extracted above.
A bare perusal of para 7 of the affidavit filed by the Petitioner in support of the present writ petition indicates that the web portal communication dated t6.L2.2023 received by the Petitioner clearly and categorically stated that the Petitioner stood as L1, M/s. Sai Pharmacy stood as L2 and the 2nd Respondent herein stood as L3. The counter affidavit filed by the 2"d respondent also at para 3 clearly indicates that the 2nd respondent stood as L3 in the tender (referred to and extracted above). The counter affidavit filed by the l't Respondent however, at para 5 clause (c) (referred to and extracted above) clearlv states that the znd Re ondent stood as the successful bidder bv ouotinq h st discounts in the r whi hi incorrect.
Clause 15 of Annexure-V of the tender terms and conditions clearly indicates that the contractor (loca! chemist) will have to submit certain documents : ; I
17 specified there under in the said Clause 15 along with the tender and the same is an essential condition of the tender which has to be strictly complied with. Admittedly even as per the counter of the 1"t and 2nd Respondents herein on O1.12.2O23 the 2"d Respondent had been declared as disqualified by the 1't Respondent. Even as per the tender notificataon it is borne on record that no person can be permitted to file any documents after the bid end time i.e., t4.O9,2()23 - 16.0O hours, and it is also stipulated in the tender conditions that all the bidders are requested to participate the tenders online throuqh the website https/ /qem.qov. in and further that there was no need of submittinq the hard coov of the bid. In the present case the same had not been admittedly followed by the 2"d Respondent.
This Court ooines that the basic reourrement of Article 14 is fairness in a ion bv the State, and non- arbitrariness in essence and substance is he heart beat t f fair la and the Res ondents herein ar act validlv and not whimsicall v for anv ulterior DurDOSe, i j i I I ; I I I
the Resoond nts cannot oive a oob to their own tender conditions more so when Clause 15 of Annexure- V of Tender Terms and Conditions clearly stapulates that the contractor (local chemist) will have to submit certain documents as stapulated in the said Clause along with the Tender which admittedly had not been followed by the 2nd Respondent and at ls admatted in the counter filed by the Official Respondent No.1 that the 2nd Respondent had been disqualified at the first instance on O1.12.2O23, but subsequently however, the 2nd Respondent had been declared as qualified in the Technica! Bid when the Tender Notification clearly stipulated Bid End Date/Time as 14.O9.2O23 - 16.00.00 and the Bid Openang Date/Tame as 14.O9.2O23 16.30. 00. Though the Docket Order of this Court dated L8.12.2O23 clearly brought on record the submission of the Learned Counsel who appeared on behalf of the Respondent No.1 on 18.L2.2O23, that the Respondent No,2 had been disqualified and blacklisted and therefore the grant of relief as prayed for by the Petitioner in the present writ petition at the said stage i
19 i,e., as on 18.12.2023, was unwarranted but however, the counter affidavit filed by the 1't Respondent on LO.OL.2024 curiously is silent with regard to the said representation of the Learned Counsel who appeared on behalf of the 1't Respondent before the Court on 1f3.L2.2O23t but however, an affidavit has been filed by the Junior Counsel representing the learned Standing Counsel appearing on behalf of the 1't Respondent on 3O.OL.2O24 that due to miscommunication it was represented that the 2nd Respondent had been black listed and in the said affidavit also it is clearly admitted that the znd Respondent was disqualified in the Technical Bid. L7. This Court opines that in the present case an essentaal tender condition which had to be strictly complied with had not been comptied and the 1't Respondent admittedly would have no power to condone lack of such strict compliance. Any such condonation, as has been done in the present case would amount to perversity in the understanding or 20 application of the terms of the tender conditions and the same warrants interference by this Court.
Taking into consideration the above said facts and circumstances and duly considering the averments made in the counter affidavit filed by the l"t Respondent in particular para 5 (b) and (c) (referred to and extracted above) and duly considering that the action of the 1"t Respondent is irrational, mala fide and //// (I SECTION bFFICER One Fair Copy to the Hon'ble MRS Justice SUREPALLI NANDA (For Her Ladyships Kind Perusal)
The Dean, Employees State lnsurance Corporation (ESl), Sanathnagar, Hyderabad,. 2. 11 LR Copies.
The Under Secretary, Union of lndia Ministry of Law, Justice and Company Affairs, New Delhi.
The Secretary, Telangana Advocates Association, Library, High Court Buildings Hyderabad.
One CC to Sri N. Sreedhar Reddy, Advocate [OPUC]
One CC to Sri Ravinder Reddy tvluppu, Advocate [OPUC]
One CC to lt//s. P. Vijayalakshmi, AdvocateloPucl
Two CD Copies 1 I To, TJ BS .\P '.'.'i. :ri:r' 1.1t !rt&t..,. ,.'..:ar.t:r..- '
HIGH COURT DATED:2610212024 ORDER WP.No.34167 of 2023 ALLOWING THE WRIT PETITION WITHOUT COSTS. 0 ? ^. ...\ @ i? \flA .6) %
Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.